Money supply hit N12.3b in July, says CBN

The money in circulation last month was N12.3 billion, the Central Bank of Nigeria (CBN) has said.

The amount represents 12.4 per cent increase over that of last year’s.

Economists use the money supply or M2 to quantify the money in circulation. Money supply or money stock is the total amount available in an economy at any point in time.

The narrowest measure, M1, is restricted to the most-liquid forms of money such as currency in the hands of the public, travellers’ cheques, demand deposits and other deposits against which cheques can be written. M2 includes M1, plus savings accounts and time deposits, among others.

However, private sector credit declined by 1.3 per cent to N9.9 billion, while average interbank rate stood at 7.24 per cent.

Inflation slowed to 9.4 per cent year-on-year last month, from 10.2 per cent year-on-year in June.

According to the latest report, "The monthly change of the CPI was 0.32 per cent increase when compared with that of June. The year-on-year average consumer price level as at July 2011 for ‘Urban and Rural’ dwellers rose by 6.6 and 11.7 per cent. The urban ‘All Items’ monthly index declined by 0.3 per cent, while the corresponding rural index rose by 0.8 per cent when compared with the preceding month.

"The percentage change in the average composite CPI for the 12-month period ending July, 2011 over the average of the CPI for the previous twelve-month period was 12. This was slightly lower than the figure for the preceding month. The corresponding 12-month average per cent change for urban and rural indices rose by 9.7 and 13.8."

It also showed that average monthly food prices rose by 0.2 per cent in July 2011, when compared with June figure. The level of the ‘Composite Food Index,’ the report said, was higher than the corresponding level a year ago by 7.9 per cent.

"The average annual rate of rise of the index was 12.1 per cent for the twelve-month period ending July 2011. The increase in the month-on-month index was caused mainly by upward movement of the prices of some food items like yam, fruits and cereals. However, the increase in the prices of the items was less compared to the same month in the previous year causing a fall in the year–on–year per cent change," it added.

The foreign reserve stood at $34.5 billion as at August 18. Foreign-currency reserve was $31.7 billion by July 4 compared with $37 billion a year earlier.

The CBN said it acknowledged the modest increase to the external reserves in recent months.

It, however, noted that inflow into the CBN was not consistent with the high oil prices, underscoring the need for tighter fiscal controls around oil revenues as well as first line charges including Joint Venture Company deductions and subsidies. A higher rate of retention of oil revenues should facilitate the efforts at maintaining exchange rate stability as an antidote to imported inflation without excessive reliance on monetary tightening measures.